Retirement Withdrawal Calculator

Frequently Asked Questions

How long will $1,000,000 last in retirement?

At a 4% withdrawal rate ($40,000/year) with 6% annual growth, roughly 40 years. At 5% withdrawal ($50,000/year) with 5% growth, about 28 years. The exact answer depends on your actual return, inflation, and spending flexibility. Use the calculator to model your specific numbers.

What is a safe withdrawal rate?

4% per year (inflation-adjusted) has historically had about 95% success over 30 years in US markets. For longer retirements of 40+ years, 3-3.5% is more conservative and prudent. Flexibility - reducing spending in bad market years - significantly improves success rates at any withdrawal level.

Should I withdraw from Roth or traditional accounts first?

Generally draw from taxable accounts first, then traditional pre-tax accounts (to manage bracket exposure and future RMDs), and leave Roth accounts for last. However, if your traditional balance is large and you are in a low-income year before 73, consider proactive traditional or Roth conversion withdrawals to reduce future RMDs.

What happens if my portfolio runs out?

Social Security, any pension income, and part-time work provide income floors even if the portfolio depletes. Planning to delay Social Security to age 70 creates the largest possible guaranteed income floor, reducing how much you need from your portfolio at advanced ages.

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Estimates for informational purposes only.

Important Disclaimer: Estimates for informational purposes only.

This calculator provides estimates for informational purposes only. Results are based on assumptions and may not reflect actual outcomes. Consult qualified professionals in relevant fields before making important decisions based on these results.

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How This Calculator Works

This calculator simulates the drawdown of a retirement portfolio year by year. You specify the current balance, annual withdrawal amount (or rate), expected annual return, and optionally an inflation adjustment to withdrawals. The tool shows the year-by-year balance and calculates how many years the portfolio will last.

The annual calculation is: balance_t+1 = balance_t × (1 + r) − withdrawal_t. If withdrawals are inflation-adjusted, they increase each year by the inflation rate. The portfolio is depleted when the balance reaches zero. Results in nominal dollars; to think in real purchasing power, use a real return (nominal return minus inflation) and keep withdrawals constant.

Safe Withdrawal Rates

The classic "4% rule" comes from the 1994 Trinity Study: a 4% initial withdrawal rate (adjusted for inflation each year) had roughly a 95% probability of lasting 30 years in historical simulations using US stock and bond data. The key caveats:

The 4% rule was designed for 30-year retirements. For 40-50 year retirements (early retirees), 3-3.5% is more appropriate.

It was based on historical US returns. Future returns may differ, and portfolios with more bonds or international exposure have different success rates.

Flexibility helps: reducing withdrawals by 10-15% when the portfolio drops significantly can rescue a failing plan.

A common planning approach: use 4% as your initial withdrawal rate, maintain a flexible spending bucket, and review the withdrawal amount every few years against portfolio performance.

Withdrawal Sources and Tax-Efficient Ordering

Most retirees have money in multiple buckets: taxable brokerage accounts, traditional pre-tax accounts (IRA, 401(k)), and Roth accounts. The order in which you draw from these buckets dramatically affects your lifetime tax bill:

Traditional advice: Taxable first (use dividends and sell low-basis holdings at favorable LTCG rates), then traditional (defer RMDs), then Roth last (to preserve tax-free growth the longest).

Modern refinement: Fill lower tax brackets with traditional withdrawals or Roth conversions even before RMDs begin, to prevent large mandatory distributions that push you into high brackets at 73+.

The goal is to keep annual taxable income in the lowest possible brackets while still systematically drawing down traditional account balances that will otherwise generate mandatory RMDs at 73.

Sequence of Returns Risk

A portfolio's average return over 30 years is less important than the order of those returns during the withdrawal phase. If large losses occur in the first 5-10 years of retirement, the portfolio may never recover, even if subsequent returns are excellent - because you are selling shares at depressed prices to fund withdrawals.

Mitigation strategies: (1) Hold 1-3 years of spending in cash or short-term bonds as a buffer - avoid selling equities in a crash. (2) Use a flexible withdrawal strategy: reduce spending in down years. (3) Delay Social Security as long as possible to reduce portfolio dependency. (4) Build a bond ladder for the first decade of retirement to fund withdrawals without touching equities.

Healthcare, Longevity, and Planning Margins

Healthcare is the wildcard: Long-term care and medical costs in the final decade of life can be very large. Budget $200,000-$400,000+ per person as a rough healthcare reserve, or purchase long-term care insurance.

Plan to 95 or 100: If you retire at 65, a 30-year horizon takes you to 95. With improving longevity, modeling to 100 costs relatively little in extra savings but dramatically increases peace of mind.

Social Security is longevity insurance: Maximizing the SS benefit by delaying to 70 provides the most reliable hedge against very long life.

Tax laws change frequently. Verify current limits at IRS.gov and consult a qualified financial advisor before making retirement decisions.

Retirement Withdrawal Calculator

Frequently Asked Questions

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